Prepare a Statement of Cash Flows [LO1, LO2]

The following changes took place last year in Herald Company’s balance sheet accounts:

Asset and Contra-Asset Accounts Liabilities and Equity Accounts Cash . . . . . . . . . . . . . . . . . . . . . . . $20 I Accounts payable . . . . . . $20 I Accounts receivable . . . . . . . . . . . $10 D Accrued liabilities . . . . . . $10 D Inventory . . . . . . . . . . . . . . . . . . . . . $30 I Income taxes payable . . . $15 I Prepaid expenses . . . . . . . . . . . . . . $5 D Bonds payable . . . . . . . . $20 D Long-term investments . . . . . . . . . . $30 D Common stock . . . . . . . . $40 I Property, plant, and equipment . . . . $120 I Retained earnings . . . . . . $40 I Accumulated depreciation . . . . . . . $40 I D = Decrease; I = Increase.

Long-term investments that had cost the company $50 were sold during the year for $45, and land that had cost $30 was sold for $70. In addition, the company declared and paid $35 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Herald did not issue any bonds during the year or repurchase any of its own stock.
The company’s income statement for the year follows:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $600 Cost of goods sold . . . . . . . . . . . . . . . . . . . . 250 Gross margin . . . . . . . . . . . . . . . . . . . . . . . . 350 Selling and administrative expenses . . . . . . 280 Net operating income . . . . . . . . . . . . . . . . . . 70 Nonoperating items:
Loss on sale of investments . . . . . . . . . . . $(5)
Gain on sale of land . . . . . . . . . . . . . . . . . 40 35 Income before taxes . . . . . . . . . . . . . . . . . . . 105 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . 30 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75 The company’s beginning cash balance was $100 and its ending balance was $120.
Required:
1. Use the indirect method to determine the net cash provided by operating activities for the year.
2. Prepare a statement of cash flows for the year.